Ares has brought on former Blackstone senior managing director David Roth to act as partner in Ares Real Estate Group and head of US real estate private equity.
Roth, who worked for the New York-based asset manager for 12 years, comes into this newly-created position to further Ares’ goal to grow its US real estate private equity business. The strategic hire was the next step in the company’s growth plan after increased fundraising, according to Bill Benjamin, head of Ares Real Estate Group. In December, the firm raised $1.04 billion for its Ares US Real Estate Fund IX, surpassing its $1 billion target. The fund is the largest of its value-add series.
The US market accounts for the majority of Ares’ real estate equity business. Of the $7.6 billion in real estate equity assets managed by the firm as of September 30, 2018, the world’s largest property market accounted for $3.9 billion. The US real estate equity strategies were being managed by a team of 25 investment professionals as of that date.
At Ares, Roth will work alongside the firm’s US real estate private equity portfolio managers, including Steven Wolf, partner and chief investment officer of US real estate private equity, and partners Jay Glaubach, Andrew Holm and Howard Huang. Roth joins seven existing partners in the firm’s Real Estate Group.
Roth previously served as Blackstone’s head of Latin America investments and was part of the firm’s real estate business from 2006 to 2017. Prior to Blackstone, he acted as a principal in Walton Street Capital’s acquisitions group.
Roth’s experience as a former senior executive at Blackstone is expected to add to Ares’ sourcing of real estate deals and his existing investor relationships can boost fundraising efforts.
Ares currently targets value-add and opportunistic real estate investments in the US and Europe. It does not have any investment products focused on the core or non-traded REIT space.
The $1.04 billion Ares US Real Estate Fund IX is the firm’s largest US real estate fund to date. The value-add fund invests in multifamily, industrial and office properties across the US. Institutional investors include the Pennsylvania Public School Employees’ Retirement System and Texas Permanent School Fund, according to PERE data.
Ares US Real Estate Fund IX, which had $170 million invested as of September 30, 2018, was generating a gross return of 21 percent and net return of 14.5 percent, according to the firm’s third-quarter report.
Ares also reported that its European and US real estate equity businesses generated 7 percent and 3 percent net returns, respectively, during Q3 2018.
Previous Ares US real estate equity funds Ares US Real Estate Fund VII and Ares US Real Estate Fund VIII have generated net internal rates of return of 15.3 percent and 13.2 percent, respectively, according to a February 2017 report from the Commonwealth of Pennsylvania Public School Employees’ Retirement System.